Key Account Management 101
August 19, 2020 Comment off
Key account management is a term that’s thrown about all the time, with very little substance. Additionally, if you ask a load of people what it means, they’ll likely tell you slightly different definitions, particularly when it comes to the criteria for what makes an account a ‘key’ one.
This creates a problem. When a business doesn’t have a well-understood definition of a key account, it’s hard to succeed in it. After all, if you can’t define it, how can you create a strategy for it?
Defining key account management
Here’s an example from RAIN Group on what is key account management – note that this should be different and unique for every company:
“A systematic approach to managing and growing a named set of an organization’s most important customers to maximize mutual value and achieve mutually beneficial goals.
You might think it’s a bit wordy but each word has been chosen for a reason. As ‘words create meaning, meaning drives behavior, and behavior drives results’.
What are the components needed for defining key account management?
Alongside the universal definition of key account management, it’s always useful to promote a better understanding across the team of what is included in an account becoming ‘key’ and the process of defining key account management. This helps the team understand what is important to the business and what to look for.
Here are a few of the components that make up key account management:
- Limiting the number of key accounts possible, focusing on quality, and ensuring no other accounts become key.
- Allocating key accounts based on three criteria: Penetration (new), expanding (growth) and protecting (retention). Key account management doesn’t only need to be prospects, it can be your best customers too.
- Including key account management as a critical part of the business strategy.
- Understanding the best geographies, industries and company size for targeting, based on the data you have from successful deals.
Any business that defines key account management and what the components of it are can then begin making progress.
The difference between sales and key account management
The concept of sales and key account management are different. But, they need to work together. On the one hand, sales skills are required to execute the strategy, but account management skills are also required.
Unfortunately, in the Benchmark Report on High Performance in Strategic Account Management, it was revealed that poor strategic account management and sales skills ranked as one of the top challenges for average and below performers.
The simple fact is, you need strong sales skills to make it work. Without them, these activities will be difficult:
- Creating new opportunities
- Penetrating new target accounts
- Inspiring customers to think differently and more innovatively
- Understanding customers buying processes
- Moving opportunities forward
- Standing out in a crowded market
- Making a compelling business case for buying
- Presenting solutions, overcoming objections, and closing new business deals
However, without account management skills, it’ll be difficult to put a strategy or plan together, work with customers for the long-term, and maximise relationships. The process of key account management really requires a mix of skills but, more importantly, a fundamental shift in the way the selling process works. Once a key account is defined, greater time needs to be spent on it. More research is required, every conversation should be highly personalised and tailored. And every effort should be made to build relationships with key stakeholders within the business.
So, if you want to reach and grow your key accounts, first you need to define what a key account actually looks like. Then you need to ensure your team understands the context behind the definition. And, lastly, those key accounts need a different approach, encompassing both natural sales skills with account management skills. Get it right, and watch the business you want to get become a reality.